Things To Do Before Applying For A Machinery Loan
The right machinery and equipment can help your employees to automate tasks, which allows you to accomplish more in less time. Machinery that is well-maintained can help achieve uniformity in mass production and increase the effectiveness of human resources. A machinery loan, which is a specialised loan for small businesses, thus helps you to purchase or lease the right machinery for your enterprise.
These are the various benefits of a business loan for machinery:
- High loan amount for purchase of better equipment
- Line of Credit for complete control over your finances
- No collateral requirement to weigh you down
- Complete online account access for your convenience
- Pre-approved offers for better deals
However, before you apply for a machinery loan, there are a few things you must do:
Know what your business needs
The first thing to do is understand your exact machinery requirements. If you have existing machinery, check your output to see how new machines can help increase productivity. If you don’t have any machinery, find out what you need to purchase and how it can help you. Then, consider various options in the market. Once you have decided exactly what is essential, avail a machinery loan.
Understand the space requirements
Machinery requires proper allocation of space in order to function efficiently. An unplanned placement could lead to work accidents or decreased productivity. Before applying for a machinery loan, prepare a suitable blueprint for where you will place the new equipment.
Consider whether you want new or second-hand machines
Used machinery is a viable option if it has been properly maintained. It is cheaper, while serving the same purpose. However, if you wish to install machines that will serve your business well for many years to come, purchase new items instead.
Plan how to finance your machinery
Some lenders offer you a machinery loan into two options: You can opt for a standard term or a Business Line of Credit.
- A term loan means that your loan is divided into equal EMIs that you repay over your chosen tenor. It is a good option if you know exactly which machines you need and how much they cost.
- A line of credit is feasible when you are unsure about the exact amount of money you require, or are buying equipment in installments. It gives you a credit line, from which you may borrow as much as you need. You pay interest only on the borrowed amount. You can borrow more money from the credit limit again, when you need to. The best part about this facility is that it allows you to handle your monthly finances more easily. This is because it allows you to pay only the interest component as your EMI. You have to repay the principal component at the end of your term. You have the option of converting a line of credit into a term loan as well.
Calculate your EMIs
It is vital to make sure you understand the rate of interest, and do your EMI calculations accordingly. This will help you ensure that you have the ability to repay the loan on time.
Choose your tenor carefully
Find a machinery loan that provides a flexible tenor and offers multiple repayment options.
Once you have reviewed this checklist, you are ready to apply for the loan. To get a high loan amount up to Rs. 30 lakh, tenor ranging from 12 to 96 months and online account access, consider taking a Machinery Loan from Bajaj Finserv.